Firm Profile:
Bajaj Housing Finance Ltd is a non-deposit taking Housing Finance Firm (HFC), registered with the Nationwide Housing Financial institution (NHB) since September 24, 2015, and engaged in mortgage lending since Fiscal 2018. It has been recognized and categorized as an “Higher Layer” NBFC (NBFC-UL) in India by the RBI since September 30, 2022, as a part of its “Scale Primarily based Laws (SBR): A Revised Regulatory Framework for NBFCs” dated October 22, 2021.
It presents monetary options tailor-made to people and company entities for the acquisition and renovation of houses and industrial areas. Its mortgage product suite is complete and contains (i) residence loans; (ii) loans in opposition to property (LAP); (iii) lease rental discounting; and (iv) developer financing. Moreover, its main emphasis is on particular person retail housing loans, complemented by a diversified assortment of lease rental discounting and developer loans. Consequently, its monetary merchandise cater to each buyer phase, from particular person homebuyers to large-scale builders.
As of March 2023, the overall total excellent housing loans (excluding Pradhan Mantri Awas Yojana loans) have been roughly Rs. 28.7 trillion. It’s strategic focus is on low threat and quick rising residence mortgage prospects and as of March 31, 2024, residence loans contributed 57.8% of its AUM, of which 87.5% pertained to salaried prospects, 4.3% self-employed skilled prospects and eight.2% self-employed non-professional prospects.As of June 30, 2024, the corporate had 323,881 lively prospects, 83.2% of whom have been residence mortgage prospects. Total mortgage disbursements elevated to Rs. 44656.24 cr in FY24 from Rs. 26175.24 cr in FY22, which demonstrates a progress in enterprise and market attain. The corporate had a community of 215 branches as of June 30, 2024, unfold throughout 174 places in 20 states and three union territories, that are overseen by six centralized hubs for retail underwriting and 7 centralized processing hubs for mortgage processing.
Promoters & Shareholding:
Bajaj Finance Restricted and Bajaj Finserv Restricted are the corporate promoters.
| Particulars | Pre – Subject | Publish – Subject |
| Promoters & Promoters Group | 100% | 88.75% |
| Others | 0 | 11.25% |
Public Subject Particulars:
Supply on the market: Recent difficulty of approx. 508,571,429 fairness shares of Rs. 10, aggregating as much as 3,560 Cr and OFS of approx. 428,571,429 fairness shares at Rs. 10, aggregating as much as Rs. 3,000 Cr.
Whole IPO Measurement: Rs. 6,560 Cr.
Worth band: Rs. 66 – Rs. 70.
Goal: Augmenting its capital base to satisfy its future capital necessities and for common company functions.
Bid qty: minimal of 214 shares (1 lot) for Rs. 14,980 and most of 13 heaps.
Supply interval: Monday, September 9, 2024 – Wednesday, September 11, 2024.
Date of itemizing: Monday, September 16, 2024.
Execs:
- The “Bajaj” model has a prestigious legacy and is widely known as a reliable retail title, identified for its robust model worth and fame.
- The second-largest housing finance firm (HFC) in India by belongings below administration (AUM), with a confirmed historical past of strong progress fueled by a various portfolio.
- A well-established strategic presence, using an omni-channel sourcing strategy powered by customer-focused digital initiatives and technological developments.
- Clear credit score analysis and threat administration practices have led to the bottom Gross Non-Performing Belongings (GNPA) and Web Non-Performing Belongings (NNPA) amongst friends in Fiscal 2024.
- An skilled administration crew, backed by a devoted group of pros, with the aptitude to draw and retain prime expertise.
Dangers:
- Buyer Danger: The house mortgage portfolio primarily contains salaried and self-employed people who could face challenges like enterprise failure, insolvency, liquidity points, unemployment, or private emergencies.
- The housing finance trade is very aggressive and if the corporate isn’t in a position to compete successfully, it might adversely have an effect on the enterprise.
- Portfolio is considerably uncovered to actual property and any important downturn or any adversarial developments in the actual property sector.
- The Firm could face rate of interest and maturity mismatches between its belongings and liabilities sooner or later.
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Sectorial outlook – The housing finance sector in India has skilled important enlargement, with the prime housing finance market reaching ₹11.5 lakh crores by Fiscal 2024. This progress, at a compound annual progress fee (CAGR) of 20.1% from Fiscal 2019 to Fiscal 2024, surpasses the general housing finance market’s CAGR of 13.1%. Contributing components embrace speedy urbanization, enhanced infrastructure, and rising actual property costs, which appreciated by 5-7% in Fiscal 2023 and 4% in Fiscal 2024, with forecasts suggesting a 3-5% enhance in Fiscal 2025.
On this thriving sector, Bajaj Finance Ltd. stands out as a result of its sturdy efficiency. As of March 31, 2024, the corporate’s belongings below administration (AUM) had reached ₹91,370.40 crores, reflecting a notable CAGR of 30.9% from FY22 to FY24. By June 30, 2024, AUM grew to ₹97,071.33 crores. The corporate’s residence mortgage portfolio options a mean ticket dimension of ₹46 lakhs and a mean loan-to-value ratio of 69.3%. Impressively, 75.5% of its residence mortgage AUM is from prospects with a CIBIL rating above 750. Moreover, Bajaj Finance’s various portfolio contains 10% in loans in opposition to property (LAP), 11.2% in developer finance for residential and industrial initiatives, and 19.5% in lease rental discounting for industrial properties.
These robust metrics and the favorable market dynamics underscore Bajaj Finance Ltd.’s strategic place throughout the increasing housing finance sector. As such, the corporate’s IPO is well-positioned to draw important investor curiosity, reflecting its robust progress trajectory and alignment with the sector’s optimistic outlook.
The financials (income and web revenue) are proven within the graph under:
Valuation – For the final 3 years common EPS is Rs. 2 and the P/E is round 35x on the higher value band of Rs. 70. EPS for Jun-24 is Rs. 0.6 and by annualizing the EPS the present P/E is round 29.16x. It has LIC Housing Finance (8.26x), PNB Housing Finance (17.3x), Can Fin Houses (15x), Aadhar Housing Finance (24.6x), Aavas Financier (28.6x), Aptus Worth Housing (24.5x), and House First Finance (29.7x) as their listed friends as per the RHP. The corporate’s P/E is between 29x and 35x. Income and margins has been rising constantly. Its GNPA is round 0.3% and NNPA is 0.1%.
Advice – Bajaj Finance Ltd. presents a compelling funding alternative with its robust efficiency and strategic place throughout the increasing housing finance sector in India. The corporate’s spectacular progress, with belongings below administration and its strong portfolio of high-quality residence mortgage prospects underscore its sturdy fundamentals.Nonetheless, in comparison with its peer group, the IPO valuations seem comparatively excessive. Given this, whereas the corporate is basically robust and well-positioned for future progress, we advocate adopting a “purchase on dips” strategy as soon as the inventory is listed. This technique will enable buyers to reap the benefits of potential value corrections and safe a extra beneficial entry level whereas nonetheless benefiting from the corporate’s robust market outlook and efficiency.
Disclaimer:
This text shouldn’t be construed as funding recommendation, please seek the advice of your Funding Adviser earlier than making any sound funding determination.
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